Union Wage Differentials in Great Britain: Recognition or Membership?

This paper presents estimates of union wage differentials and explores to what extent they are affected by the degree of unionisation. For this purpose, data at the individual level obtained from the British Household Panel Survey (BHPS) are used. Our results support the hypothesis that the union wage premium is mainly a recognition premium. For the period 1995-1997 our estimate of the recognition premium is about 4%. This result takes into account unobserved worker heterogeneity and is obtained by using a more efficient panel data estimator compared to earlier studies.